Guinness Nigeria Plc’s revenue will shed more than N14bn which is about 6 per cent of it’s revenue as Diageo Plc has terminated the Sale and Distribution Agreement entered into with the company in 2016.
This implies that Guinness will no longer be the importer of Diageo international premium spirits products, including Johnnie Walker, Singleton, and Baileys and others.
Guinness said in a regulatory filing on the Nigerian Exchange Ltd that, with effect from April 2024, it will no longer import or distribute certain Diageo international premium spirits products.
“This move is in line with Guinness Nigeria’s long-term growth strategy, and it is also in alignment with Diageo PLC’s decision to establish a new, wholly owned spirits-focussed business to manage the importation and distribution of its international premium spirits portfolio in West and Central Africa, with Nigeria as one of the hubs,” the brewer said.
According to Guinness, in the financial year ended 30 June 2023, the revenue related to Guinness Nigeria’s portfolio of imported Diageo international premium spirit products was N14bn, which is approximately 6 per cent of Guinness Nigeria’s total revenues.
But Guinness Nigeria said it will continue to manufacture and distribute its full portfolio of non-alcoholic drinks, beer, ready-to-drink (RTDs) and locally produced spirits, including Orijin, Captain Morgan Gold, Gordon’s Moringa, and Smirnoff X1 Choco.
The development does not change Diageo PLC’s shareholding in Guinness Nigeria, and Diageo remains a key shareholder of Guinness Nigeria, the company maintained.
However, Guinness said Diageo Plc’s decision is beneficial because it will “be better positioned to focus on its core business and its strength in the manufacturing, marketing and distribution of non-alcoholic drinks, beer, RTDs and its locally produced spirits, thus enhancing sustainability, growth, and value creation for all stakeholders of Guinness Nigeria.”
It said the change would enable the full utilisation of Guinness Nigeria’s asset base and will accelerate innovation in local spirits products.
“This strategic change reduces the Company’s foreign exchange requirements and mitigates the negative impacts of lingering foreign exchange scarcity and exchange rate volatility on the financial performance of the Company,” Guinness added.